Veteran food truck owner turns to quick financing to stay afloat during the pandemic

When federal funding programs don’t work for the small businesses they were designed to support, owners may be forced to seek out much riskier avenues to capital in order to keep their doors open. Unfortunately Chef Frisco Thumbtzen in South Carolina is one such example. 

After his military service left him with disabled veteran status, Chef Frisco turned to entrepreneurship. In the military, he worked as a limousine driver and when he was discharged, he was given his own vehicle so he could start up his own transportation business. 

However, Frisco had a passion for food and cooking. After a few years as a business owner, he took the money he received from the G.I. Bill and enrolled in culinary school. For three years now, Chef Frisco has been the sole owner of Charleston Caribbean Creole food truck and catering company, mainly serving corporate offices in the Charleston area. 

Due to the nature of his business, the COVID-19 pandemic hit Chef Frisco hard. When people began working from home and cancelling events, he and his employees were essentially out of work, but Chef Frisco was not ready to give up. He started parking his truck outside of gas stations and partnering with apartment buildings to provide lunch for local residents. 

But, despite all his efforts, sales were still down. With his livelihood on the line, Frisco worked with his accountant to apply for federal funding through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL), but was unable to secure funding due to a technicality with his business address. 

With nowhere else to turn, Frisco decided to take out a merchant cash advance (MCA), a financing product with a 25-30% interest rate that requires  daily re-payments that are withdrawn from his bank account. 

He says, “It was like making a deal with the devil, but you do anything you can to stay afloat and you just hope you will make it to the other side alive.”

In total, Frisco borrowed $28,000 and now has to pay back $42,000. Within the first three months of the loan agreement, he had already paid the lender half of what he owed at a rate of $367 a day, five days a week. 

Chef Frisco explains, “By the time they deposit the money into your account, it’s essentially already gone. They take the money you owe daily, so if you have one slow day, you may not be able to make your payment.”

Frisco estimates that he was only able to use about a fifth of the loan to support his business and needed the rest to pay the loan back. On top of the high interest rates and daily payments, lending companies are constantly marketing to Frisco to encourage him to take out more money. 

As a veteran entrepreneur, Frisco was shocked that it was so difficult for him to secure government funds, but, unfortunately, he feels it is par for the course when it comes to accessing resources as a Black entrepreneur.

He says, “Minority entrepreneurs are so under-resourced. We are running our businesses. We don’t have time to read through all of these materials. Information needs to be more readily available in an easy-to-consume way.” He goes on, “People assume business owners  know about things like this, but we don’t. I am an expert in my business, but I am by no means an expert in finance or accounting.”

If he had received PPP or EIDL funding, Chef Frisco believes he would be growing and improving his business like so many of the businesses that secured those loans. But, instead, he still feels like he has been trapped in a debt cycle despite business picking up. 

Frisco looks forward to the day when he has paid off his MCA and hopes to be able to invest in marketing and growing his business.

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